Property markets in south-east Queensland and Perth will continue to suffer during Spring as listings decrease and buyers continue to look for bargains, experts predict.
However, other markets including urban Melbourne and inner-city Sydney will continue to hold up due to population growth, with the latter even primed for price increases during the next year, the experts say.
The predictions come as auction clearance results show the value of properties on market is continuing to decline as demand for prestige properties falls.
SQM Research founder Louis Christopher says although most markets are holding up well in a relatively flat market, areas such as south-east Queensland and Perth are continuing to suffer due to low tourism activity and an oversupply of dwellings. Some areas within those markets could even record slight price decreases, he warns.
“There are two extremes right now. There are markets doing well, like Sydney, and most of the capital cities are there. But the weakest markets are definitely south-east Queensland, the Sunshine Coast, Brisbane, and in that area. Things are going from bad to worse.”
“Look at the auction clearance rates – they are under 20%. It’s a very weak market, heavy discounting going on there, and a lot of listings. Perth is also underperforming there as well right now,” he says.
Real Estate Institute of Australia president David Airey says low tourism is continuing to hurt south-east Queensland.
“The Queensland areas are definitely the weakest right now, purely because there is low tourism and there is an oversupply of property there. The more expensive properties aren’t selling there, and that’s the case right across Australia as well.”
“The Perth market is also performing very poorly, although I do think there are some quiet signs of improvement in the inner-city areas. I think we may see a trend upwards as the football season is over and Spring goes ahead.”
However, both Christopher and Airey say Sydney is one of the better-performing markets during Spring. Christopher says if current trends continue, there may even be some price increases in the foreseeable future.
“I think we’ve got a situation where prices could be moving up again modestly in the Sydney market after six months of stagnation, so that’s one positive. Most markets there are doing well, especially the inner-city areas, although the prestige market isn’t holding up so well.”
“As for Melbourne, it’s weaker than it was this time last year but it’s still holding its own. However, it’s more of a buyer’s market with auction clearance rates likely to be in the low 60s and high 50s. Prices have come from being overheated.”
Airey says Sydney will continue to perform reasonably well, with low supply and high population growth fuelling those inner-city areas.
“The other problem with Sydney is transport. Transport is a big issue, and people tend to buy in areas that have established transport routes in the inner-city. Those areas are continuing to perform well with high sales numbers.”
“Melbourne is also showing enormous resilience compared to other capital cities, but we will see that more people will move to private sales in the prestige market as no one is putting them up for auctions due to discounting.”
The Real Estate Institute of Victoria echoed those sentiments in its report on the weekend’s auction activity, saying there was an increase in numbers due to vendors avoiding selling during next week’s AFL grand final.
However, the 664 auctions reported is a decrease from last year’s result, when 820 properties were put up for sale. A total of 477 sold and 187 passed in, with a clearance rate of 72%. Total sales came to $373.67 million.
In Sydney, 209 properties sold out of 299 on the market, resulting in a clearance rate of 63% with total sales worth $184 million. However, the weaker Queensland market was visible over the weekend with Brisbane recording only four sales out of 26 properties available.
Sales were weaker in Adelaide as well, with 23 properties selling out of 38 on the market, resulting in a 52% clearance rate.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
